Gold has been in a steady uptrend since December 18th, bottoming at $1131 after a four and half month price correction. Firmly back over the 50 dma, the price momentum appears to be a threat to the “bullion” banks who suppress the price of gold in the paper derivatives market on behalf of the western Central Banks and, ultimately, the BIS.

The banks must feel threatened by the recent activity in both physical and paper gold trading. This morning the price of gold was attacked in the Comex paper market after St. Louis Fed-head, James Bullard, delivered remarks about interest rate policy that should have propelled the price of gold higher: “We think the low-safe-real-rate regime is unlikely to change in the near term. This means the policy rate can also remain relatively low over the forecast horizon” (link).

Instead, the Comex was bombed with paper:

At 9:54 a.m. EST, 3,927 April gold futures contract (paper gold) was dropped on the Comex. Prior to this, the the average number of contracts per minute since the Comex had opened was under 500 contracts. This is 11.1 tonnes of paper gold which hit the Comex trading floor and electronic trading system in a 60 second window. It represents approximately 30% of the total amount of gold the Comex vault operators are reporting to be available for delivery under Comex contracts – dumped in paper form in 1 minute.

This reeks of fear. The western Central Banks have grossly underestimated the eastern hemisphere’s appetite for physically deliverable gold. Despite an attempt by the BIS to mute India’s demand by restricting the availability of cash in India’s banking system, India’s current demand is robust and will likely increase as Indian’s now have cause to fear the Indian Government’s war on cash.

In addition, China’s demand for gold seems to be accelerating. Based on Swiss export numbers, 158 tonnes of gold was shipped to China in December. Far higher than the numbers presented by “official” organizations tracking gold flows. Current premiums to the global market price of gold on the Shanghai Gold Exchange are running in the low teens. So far this week well over 100 tonnes of gold have been delivered onto the SGE. Except for the PBoC, all gold distributed inside China must first pass through the SGE.

The western Central Banks will have a problem if the price of gold begins to take-off, as they will lose control of their ability to control the price using derivatives. Perhaps in addition to the standard price containment operation on the Comex this morning, the attack on the price of gold in the paper market was in response to Eric Sprott’s comments on King World News yesterday:

“There’s no doubt about it if they (investors) keep coming in and buying that kind of tonnage. At some point they will look inside at what little gold is left in the Western vaults and say, ‘No mas. We can’t keep doing this at the rate that they are buying tonnage because we will run out of gold.’ And if they see that they are going to run out of gold in a year or so, when do they raise the white flag? I have told you many times that the Western central banks have been making up for the imbalance in term of supply and demand by dishoarding their gold hoard surreptitiously”

Our sales have increased by 30-40 per cent over the last week following a decline in gold prices. Given that the current price level will continue, we see this season as one of the best festive seasons in terms of jewellery sales in recent years,” said Rajesh Mehta, managing director, Rajesh Exports, one of the largest jewellery retailers in India. – LINK, as sourced from John Brimelow’s “Gold Jottings”

I say “unofficial” bottom to this 9-week manipulated take-down in the price of gold because we don’t know to what extent the western Central Banks will throw paper at the NY and London gold “markets.” But based on the latest Commitment of Traders report, the bullion banks are covering their shorts fairly aggressively while the moronic hedge funds dump their longs and try to chase the market lower by piling in to the short side. This has always been a recipe for at least short term move higher in the metals.

But the cartel’s takedown of the paper gold price has created a nice ex-import duty premium bid in the Indian gold market just ahead of India’s festival season: “Dropping of the rates depend on the international market. If it continues, we are sure to have a bumper Diwali this year,” said N Anantha Padmanabhan, regional chairman, All India Gems and Jewellery Federation – LINK.

Please note that a sudden surge in legal kilo bar imports will not depress dore bar importation or smuggling, the latter of which is now estimated to fill about 30% of India’s annual gold demand now.

Recall that China was closed last week, while India was transitioning into it’s biggest buying season. The banks used this opportunity to launch their most aggressive paper attack on gold since 2011 in London and on the Comex. They also used the big drop last week to print profits at the expense of hedge funds and whiny retail bucket shop traders. But, the western gold cartel take-down of gold using paper has helped ignite India demand: “In the past fortnight, gold has fallen in the international market by 5.8 per cent; the price in India is down 4.9 per cent. With the ‘pitrupaksha’ period over, when buying of gold is considered inauspicious, festive demand has started – LINK.

With the bullion banks covering their illegal paper shorts, gold is the most oversold that it’s been in 3 years. I suggested several weeks ago that we might get a “200 dma” pullback. Here it is:

Again, I’m calling an unofficial bottom because, in a system that allows a criminal to run for President, there’s not telling the degree to which Wall Street will resort to illegal market manipulation in order to keep a lid on the price of gold. But I am certain that the Indians, Chinese and Russians will – as Alan Greenspan would say – “measurably” increase their “consumption” of physical gold.

I will be reviewing and updating my favorite junior exploration picks in this week’s Mining Stock Journal. I am featuring some graphs which reinforce my view that this sell-off is over, with the market “percolating” for another big move higher – possibly ahead of the next Fed policy move, which I believe will entail more QE. I am also going to present some ideas to take advantage of the oversold condition of the highest quality large cap mining stocks. You can subscribe to the Mining Stock Journal with this link: MSJ Subscription. This includes email delivery of all back-issues. The last issue featured a silver explorer trading below 50 cents that could ultimately be a $10 stock.

Whenever destroyers appear among men, they start by destroying money, for money is men’s protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. – Ayn Rand, “Atlas Shrugged”

I don’t know about anyone else, but I find it ironic that Alan Greenspan, the guy who inflated the fiat currency and debt bubble – the Great U.S. Ponzi Scheme, was a disciple of Ayn Rand before Henry Kissinger got ahold of him and turned him inside-out.

I wanted to post an article that I read back in 2007 which shed even more light on the truth about what was unfolding economically in the United States:

There are few things that federal big spenders hate more than gold. Why? Because they know that, historically, gold has provided the best means by which people could protect themselves against the ravages of a rapidly depreciating currency.

The mainstream press often uses the term “inflation” to describe rising prices. That’s incorrect. Actually, when the general price level is rising, that’s a result of inflation, not inflation itself. Inflation is the process by which governments print up the money to pay for ever-increasing expenditures.

The part about the nature of inflation was not the eye-opener. Anyone who didn’t sleep through their 1st-level macro-economics course in college, assuming it was a bona fide economics course, knows the true definition of inflation.

The light on the truth become more bright for me when Jacob Hornberger laid out the historical evolution of fiat currency and the destruction of the Constitutional Amendment which mandated specie – physical gold and silver coins – as the only permissible legal tender in the United States.

So how did things change so dramatically? How did it come to be that the monetary system of the United States is now based on irredeemable paper money? Why are gold and silver coins and gold and silver certificates no longer used as our country’s money? Given that there was never a constitutional amendment changing America’s monetary system, how did things change so radically?

The answer lies with two presidents — Abraham Lincoln and Franklin D. Roosevelt. Their respective actions revolutionized our nation’s monetary system. Their actions culminated in a monetary system that has enabled federal authorities, decade after decade, to fraudulently plunder and loot the American people, even to the point of denying them the ideal means — ownership of gold — by which to protect themselves from the federal government’s immoral and insidious monetary behavior.

This is a MUST-READ documentation of the history of fiat currency and ultimate destruction of the gold standard in the United States: The Federal War On Gold

This article is the foundation for understanding why I have stated since 2003 that the elitists running this country would be able to hold the system up with printed money and credit until they had swept every last crumb of citizenry wealth off the table into their pockets. The lust for power and greed knows no bounds – history has already spoken on this human condition.

In the markets of today the gold price is being set by ‘synthetic gold’ and has no connection to the fundamental flows. – “Jesse” of Jesse’s Cafe Americain in an email exchange with me

Share this:

Jim Rickards made headlines today with an interview he did with Peter Schiff in which he claims that the gold held by the Fed is leased out several times over but is still sitting in the Fed vaults. If that’s case, Jim, then how come the Fed won’t allow a physical audit. If the Fed is going to perpetuate and legitimize a lie, at least show us the bars. Sorry Jim, you’re propagating misleading information once again (see my comments below)…

The silver uptrend holds:

The Fed and the big banks who are undeniably engaged in trying to hold down the price of gold and silver on a daily basis now, are having trouble getting silver to die. The reason: India and China have been buying physical silver hand-over-fist:

The graph above from The SRSrocco Report shows the stunning 90% drawdown of physical silver from the Shanghai Futures Exchange. I can guarantee you that the amount of silver reported as being held by the big bank depositories on the Comex is probably in a similar state of condition.

Think you own silver when you own SLV?

More on Rickards’ disinformation:

Everyone knows the market is manipulated and the U.S. gold bars are all leased out. Nothing new there. But he’s trying to make us believe the bars are still in the vaults.

Sorry, they’re not. If the bars were in the vaults, the Fed would at LEAST add “credibility” to its cover-up by releasing bona fide physical audits.

Here’s the questions I want Rickards to answer:

1) Why won’t the Fed at least allow an audit – a physical count and random assay of the bars supposedly in the vaults? It could EASILY do that without revealing whether or not the bars have been legally hypothecated/leased.

2) Germany wanted to see its gold – it requested a viewing. Supposedly Germnay’s gold is being held in 9 vaults. But German officials were only permitted to see gold in ONE vault. Why, Jim?

Please address those questions. Once again Rickards is feeding the world misleading information.